Mumbai: After a huge outcry from the general public, the Reserve Bank of India (RBI) on Thursday raised the cash withdrawal limit for Punjab and Maharashtra Cooperative Bank (PMC Bank) customers to Rs 10,000 per account from Rs 1,000. The revised limit will include the Rs 1,000 that customers may have already withdrawn.
The central bank said that with the raised withdrawal limit, more than 60 per cent of the bank’s depositors will be able to withdraw their entire account balance.
The central bank also sacked the board of the bank and appointed an administrator. The bank’s Managing Director Joy Thomas has also been suspended effective Wednesday. As a result, the PMC Bank called off its 36th annual general meeting that was scheduled to be held on September 28 in Mumbai.
Thomas notified the development to stakeholders late on Wednesday.
The RBI has also asked PMC Bank to keep the amount required to pay the depositors separately in an escrow account and/or in earmarked securities which will be utilised by the bank only to pay to the depositors.
“It has been decided to allow the depositors to withdraw a sum not exceeding Rs 10,000/- (Rupees Ten Thousand Only) (including Rs 1,000/- wherever already withdrawn) of the total balance held in every savings bank account or current account or any other deposit account by whatever name called, subject to conditions stipulated in the RBI Directive dated September 23, 2019… With the above relaxation, more than 60 per cent of the depositors of the bank will be able to withdraw their entire account balance,” the RBI said. It said the Directions were necessitated on account of major financial irregularities, failure of internal control and systems of the bank and wrong/under-reporting of its exposures under various Off-site surveillance reports to RBI that came to the Reserve Bank’s notice recently.
One reason for the RBI action was the high under-reporting of bad loans by the bank. The gross non-performing assets (NPAs), as per its FY19 balance sheet, was at 3.76 per cent of its advances but news reports pegged it in high double-digits.
Thomas in an interview has admitted that the problem rose because of under-reporting of NPAs from the loans granted to real estate group Housing Development Infrastruc-ture (HDIL), which has gone bankrupt.
Former BJP MP Kirit Somaiya and several account holders of PMC Bank filed police complaints on Thursday against top officials of the bank and HDIL for allegedly looting Rs 3,000 crore of the depositors, police said. Somaiya went to Mumbai Police's Economic Offences Wing (EOW) and filed a written complaint, alleging that money of at least 9.12 lakh depositors of the PMC Bank was looted by its top management and HDIL and that there should be a forensic audit of these transactions.
The bank unions, the All India Bank Employees Association (AIBEA) and the All India Co-operative Bank Employees Federa-tion (AICBEF) wrote to Finance Minister Nirmala Sitharaman seeking stern action against the RBI officials responsible for the bank’s oversight.